New Zealand consumer sentiment rose for a third month in May, adding to signs the economy’s recovery will accelerate as low interest rates buoy hiring and demand.
Confidence climbed 3.4 percent to 126 from 121.9 in April, according to an index compiled by Roy Morgan Research and ANZ National Bank Ltd. The gauge is at its highest level since January, Wellington-based ANZ said in an e-mailed statement.
New Zealand companies hired about 22,000 workers in the first quarter and the jobless rate fell to 6 percent from 7.1 percent, helping stoke consumer confidence. Finance Minister Bill English yesterday announced tax cuts for all workers to increase household income and buoy economic growth.
“While consumers’ view of current conditions remains low relative to the overall level of confidence, the current measure has been gradually improving for 18 months,” ANZ said. “The slow but steady improvement augurs well for a gradual improvement in prospects for the retailing sector.”
In April, Reserve Bank Governor Alan Bollard, who has kept the official cash rate at a record-low 2.5 percent since April last year, said he may raise borrowing costs in coming months.
The measure of current conditions, which assesses how consumers feel about their financial position compared with a year earlier and whether it is a good time to buy a major household item, rose to 108.3, the highest level since January.
A second gauge of future conditions advanced to 137.8 from 135.1 in April as fewer consumers said they expect to be worse off in a year’s time, today’s report showed.
While consumers are feeling a little less wealthy, they also feel less helpless, said Rod Duke, managing director of Briscoe Group Ltd., which sells sporting goods and home ware.
“Shoppers will continue to spend with caution, even as they begin to feel more financially secure,” he told an annual shareholders meeting in Auckland yesterday. “That means that times will continue to be tough for retailers. Consumers are restricting spending to fit their budgets.”
The poll of 995 people was conducted between May 1 and May 15. An index level above 100 shows more people are optimistic than pessimistic.